Brazil and Argentina are mooting the use of a common currency “that can be used for both financial and commercial flows, reducing costs operations.” The announcement was made in a joint statement by Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez quoted by Argentinian media outlet Perfil, reported Reuters.

This is a positive development between the South American neighbours as the relations between the two nations had suffered a blow under former Brazilian right-wing President Jair Bolsonaro.

“We intend to overcome the barriers to our exchanges, simplify and modernise the rules and encourage the use of local currencies,” said the statement.

“We also decided to advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing costs operations and our external vulnerability,” the article added.

Argentina is Brazil’s largest trade partner and this plan, which will be discussed at a summit in Buenos Aires this week, will be a win-win situation. As per officials cited by Financial Times, the use of a new common currency will lessen the reliance of South America on the US dollar and give an impetus to regional trade.

Lula’s win in the most contentious Brazil elections is likely to bolster the country’s ties with its neighbour Argentina. President Lula chose Argentina for his inaugural international trip after taking office, which is perceived as a step towards the revival of the Community of Latin American and Caribbean States (CELAC) direction. Bolsonaro during his tenure refused to join the bloc in 2019 due to the presence of Cuba and Venezuela in it.

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